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The Weekly paper of the New Communist Party of Britain

The crisis in the water industry

Back in the day Labour Party conference was an arena for genuine debate. Those days are long gone. And although the Blairite dream of reducing annual conference to a meaning less charade has not come to pass, the annual gathering of MPs, councillors and activists is but a shadow of the forum it once was in the golden days of the 1970s.

There is, of course, still some debate within the Labour Party. In his leadership bid Andy Burnham talked about renationalising the crisis-ridden water industry and ending homelessness by building hundreds of thousands of new council houses. Two months after his victory and we’re still waiting to see the plans.

The debate has continued amongst the union activists, constituency parties and pressure groups that surround the Burnham team. But unfortunately that’s as far as it goes. It’s done little to advance the cause of council housing, which seems to have already been put on the back burner by the Burnham government that has returned to the Blairite jargon of “social” or “affordable” housing that just means more private estates for those who can afford it. As for the water industry, nobody knows.

For years, privatised water companies have fleeced customers, prioritised shareholder returns and underinvested. Everyone agrees they’re on the point of collapse. Most, even amongst the ruling class, accept some form of state intervention – either to bail out the private companies who are on the brink of bankruptcy or to take them back into some form of public ownership.

Some, such as the Liberal-Democrats, argue for mutualisation, which would transform the water companies into mutuals – not-for-profit corporations owned by those who use them. Mutuals are indeed a form of co-operative ownership once favoured by building societies and some Canadian insurance companies.

Mutualisation is a form of public control. But it is not public ownership. The existing debts of the water companies would be passed on to the new ‘stake-holders’ – the consumers who will be told they ‘own’ the mutual. They will clearly own the massive debts that will be settled through premiums added to every mutual member’s water bill.

Renationalisation is the obvious answer. The industry says it comes at a hefty price. Some say £144 billion would be needed to compensate the largely corporate shareholders. Others such as the Left Foot Forward campaign argue for the operating licences of water companies to be revoked because they have engaged in illegal and abusive practices and the companies placed into special administration. “In most cases”, they say, “shareholders would recover little, if any, value. In the event of bankruptcy, lenders would recover little. So, the government would be able to buy companies at a knock-down price, possibly by borrowing, and give the industry a debt-free restart.”

Much of the discussion on how this can be achieved continues in obscure journals or behind closed doors. But restoring the public sector in the water industry and beyond is a crucial demand of the labour movement that cannot be side-lined or ignored.